Flooding bottles up US ethanol

  • Market: Biofuels, Oil products
  • 03/21/19

Floodwaters in the US midcontinent have bottled up the country's largest ethanol producing region, trimming production as plants wait for railroad repairs.

Devastating flooding in a key corridor along the Nebraska and Iowa border over the past week shut down rail routes and forced some ethanol plants to curtail production. The transportation outage has left some fuel blenders considering alternate sources of octane despite record US ethanol stockpiles.

"There is no doubt that production and transportation is being affected," Iowa Renewable Fuels Association executive director Monte Shaw said.

An intense weather system last week dropped snow and then heavy rain through the northern plains, flooding the Missouri river along the Iowa, Nebraska and Missouri borders. River levels reached two feet above moderate flood stages in Omaha, Nebraska, on 17 March, and approached 30 feet, or within two feet of record levels, at St Joseph, Missouri, according to the National Weather Service.

Waters submerged or washed out miles of BNSF and Union Pacific track. Both railroads embargoed movements to certain destinations beginning late last week in Iowa, Nebraska and Missouri as routes became impassable. The number of BNSF ethanol rail cars that have not moved in at least 48 hours soared last week to more than 860 cars, according to the Surface Transportation Board — almost ten times the number of idle cars for the same week last year. The railroad reported routes connecting into Sioux City, Iowa, and to Omaha and Lincoln, Nebraska, as out of service as of yesterday. Union Pacific, which had fewer than 100 ethanol cars not moving for more than 48 hours over the same period, reported rail lines out of service in eastern Nebraska and as under observation between Illinois and Kansas across Missouri.

Flood warnings remain in place into next week for southwest Iowa and eastern Nebraska. The states combine for 40pc of installed US ethanol capacity.

Nebraska plants had not suffered flood damage, state ethanol board chairman Jan tenBensel told Argus. But the logistical constraint had cut production as plants deal with slower shipments to market, and raised concerns about delivering grain to some facilities.

"Most of the plants are going right now at a reduced pace, just waiting for the railroad to get cars to them," tenBensel said.

Flint Hills Resources confirmed reduced rates at its ethanol plants in the affected area to manage slower rail movements south.

"We continue to operate, even though shipping is a challenge," spokesman Michael Wilhelmi said.

The company separately confirmed disruptions to deliveries into Texas.

"Flint Hills Resources is adjusting our gasoline production to make up for the loss of ethanol to meet demand," the company said.

Ethanol last year accounted for more than 10pc of the US gasoline supply, and offers a critical cheap source of oxygenate and octane for finished fuel. Fuel blenders without ethanol would turn to blending premium blendstocks into lower-octane unfinished gasoline, raising potential isolated shortages for premium gasoline.

Texas trade associations confirmed they were not yet seeking state support for federal fuel specification waivers. The Environmental Protection Agency did not comment on whether it received any requests for help from other states.

Magellan Midstream Partners and Kinder Morgan were both monitoring supplies but reported adequate inventories for customers.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
02/26/24

Vopak builds on Singapore biofuels bunkering capacity

Vopak builds on Singapore biofuels bunkering capacity

Singapore, 26 February (Argus) — Storage company Vopak has commissioned 40,000m³ of capacity at its 1.34m³ Sebarok terminal in Singapore for the blending of biofuels into marine fuels. The company has been carrying out multiple trials with customers since 2022, with its existing pipeline system at Sebarok also converted to a dedicated biofuels blending service as part of the overhaul. Vopak initiated the change in response to increasing demand for blending and storage solutions at the world's largest bunkering port, where biofuel blends have increased from almost zero in 2022 to 518,000t last year, according to the Maritime and Port Authority of Singapore. "Our vision for Sebarok terminal is to be a sustainable multi-fuels hub to strengthen Singapore's position as the top bunkering hub," said Vopak's Singapore business unit president Rob Boudestijn. "As a storage and critical infrastructure services provider, this development can facilitate the entry of more biofuels companies to diversify the supply chain for marine biofuels and accelerate the decarbonisation of the shipping industry." International Maritime Organisation directives stating that all ships sailing in international waters need to reduce their greenhouse gas emissions by at least 20-30pc by 2030 compared with 2008 base levels, along with the EU integrating maritime under its emissions trading scheme from this year, have accelerated decarbonisation plans across the marine sector. By Amandeep Parmar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read More
News

Panama urges fleet to avoid Red Sea, keep AIS on


02/23/24
News
02/23/24

Panama urges fleet to avoid Red Sea, keep AIS on

New York, 23 February (Argus) — The Panama Maritime Authority said today it "strongly recommends" all Panama-flagged vessels avoid transiting the Red Sea because of the increasing threat of Houthi attacks on commercial vessels, while warning vessels against turning off their automatic identification system (AIS). Some ship operators have chosen to disable their vessel's AIS to avoid detection by the Houthis with varying levels of success when transiting the region. That puts these vessels out of compliance with "international requirements related to position reporting," the authority said in a notice. More than 120 commercial and private vessels flagged by Panama were transiting the Suez Canal, the Red Sea, and the Gulf of Aden on Friday, according to vessel tracking data reliant on AIS. "All vessels hoisting the Panama flag before, during and after transiting the Red Sea, Gulf of Aden and Persian and their approaches must keep the AIS and long-range identification (LRIT) on except in those cases in which the captain considers that the safety of the vessel could be compromised or when a safety incident is imminent," the notice said. "The Panama Maritime Authority may sanction violations of such provisions in accordance with national legislation, if they do not formally report through LRIT and AIS to our administration at the appropriate time." The authority said the Bahamas-flagged vessel Galaxy Trader had operated without its AIS for 24 hours, traveling 250 nautical miles through the region, before being attacked by Houthis anyway. For vessels continuing to transit through the region, recommendations by the authority include traveling by night to avoid detection and installing searchlights to scan for the small vessels that likely act as spotters, the appearance of which have preceded Houthi missile attacks . But traveling by night comes with another risk. "At night, small and slow boats without a wake are difficult to detect on radar," the authority warned. "Don't stop if threatened and present a challenging target through proactive maneuvers." The Panamanian flag is flown by the plurality of flagged ships in operation at 17pc of the global fleet, represented by over 8,000 vessels, according to the state-owned Panama Ship Registry. By Ross Griffith Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Fire breaks out at S-Oil's Onsan plant in South Korea


02/23/24
News
02/23/24

Fire breaks out at S-Oil's Onsan plant in South Korea

Singapore, 23 February (Argus) — A fire broke out at South Korean private-sector refiner S-Oil's Onsan plant on 23 February, affecting operations at a crude distillation unit (CDU). The fire broke out at a pump linking refinery units. The 580,000 b/d Onsan plant's 250,000 b/d No.3 CDU was impacted, sources close to the refiner said. No casualties have been reported thus far. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Canal disruptions spur fast steaming: UN


02/22/24
News
02/22/24

Canal disruptions spur fast steaming: UN

New York, 22 February (Argus) — Ship operators are increasingly speeding up their vessels to offset the lengthier voyages around the Cape of Good Hope necessary to avoid the conflict-afflicted Suez Canal and drought-plagued Panama Canal, according to a UN Conference on Trade and Development (UNCTAD) report published today. "The disruption in the Red Sea and Suez Canal, combined with factors linked to the Panama Canal and the Black Sea and leading to rerouting vessels through longer routes are causing vessel sailing speeds to increase," the UNCTAD said. "This is a means for ship operators to ensure schedule integrity and manage the fleet capacity." The jump in steaming speeds is a departure from record slow steaming speeds hit last year among the dry bulker segment as shipowners attempted to reduce emissions per the International Maritime Organization's (IMO) new environmental regulations, which kicked off in 2023. "An increase from 14 to 16 knots would increase ship (fuel oil) consumption per mile by 31pc," the UNCTAD said. "These trends could erode the environmental gains that had been achieved through slow steaming." The Argus -assessed carbon cost of freight (CCF), which ship operators have to pay to comply with the EU ETS, of a 65,000 dwt long range (LR1) refined products tanker traveling from Ras Tanura in the Middle East to Rotterdam was at 46¢/t on Wednesday, assuming a Suez Canal transit under nominal conditions, for a lumpsum of $30,223. The same fee to shipowners could hit as high as 96¢/t, or $62,129 lumpsum, assuming a 31pc increase in consumption from a two-knot increase in speed alongside the additional two weeks of travel time to avoid the Suez Canal around the Cape of Good Hope. Traders shift to rail Some traders looking to move commodities between the Atlantic and Pacific basins are adjusting their focus away from seaborne routing altogether, with rail traffic jumping in the US since the start of the year because of the rising danger near the Suez Canal and the ongoing drought restrictions at the Panama Canal, according to the UNCTAD. "In the United States, demand for rail transport services has surged as a result in recent weeks, as shippers no longer have the option of going through the Suez Canal as an alternative to the Panama Canal," the UNCTAD said. "The land bridge, which connects the ports of Los Angeles and Long Beach in the United States by rail with the wider North American hinterland, is the other main competitor for the Panama Canal." The move mirrors major container shipping giant Maersk, long a preferred client of the Panama Canal because of the large amount of traffic it pushed through the waterway, choosing earlier this year to halt many Panama Canal transits in favor of discharging two separate vessels on either side of Panama and swapping their cargoes by rail instead. West coast South America countries like Chile, Peru and Ecuador funnel 22pc, 22pc and 26pc of their total foreign trade volumes through the Panama Canal, according to the UNCTAD, and buyers in these countries of refined oil products like diesel and gasoline sourced from the US Gulf coast will need to continue to vie for booking slots at the Panama Canal in the absence of a rail connection. Those without slots will need to win auctions, which jumped above $500,000 lumpsum in early February per Argus assessments for the medium range (MR) tankers utilizing the Panamax locks, to secure passage. By Ross Griffith Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Braya begins renewable diesel production


02/22/24
News
02/22/24

Braya begins renewable diesel production

Washington, 22 February (Argus) — Canada's Braya Renewable Fuels today launched commercial operations at its renewable fuels plant in Come By Chance, New Foundland and Labrador. Braya expects to produce 18,000 b/d of renewable diesel, using internally-produced traditional hydrogen. It envisions expanding its diesel capacity to 35,000 b/d and adding sustainable aviation fuel (SAF) production in the future. It also said it is in the early stages of exploring renewable hydrogen production at the refinery to lower its carbon footprint, but does not have a timeline. Last year it began seeking a supplier of 35,000 t/yr of renewable hydrogen to support its diesel and SAF production, and in March 2023 selected German renewables developer ABO Wind as its preferred supplier. Braya's ownership group Cresta Fund Management acquired the 130,000 b/d petroleum refinery in 2020 and began work to convert the facility to produce renewable fuels in late 2021. Initially it aimed to produce 14,000 b/d of renewable diesel and targeted SAF production in mid-2022, but a fire in September 2022 postponed startup. By Emmeline Willey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.